a. Journalize the transactions under the direct write-off method. June 8. fill in the blank bf7117f8305e074_2 fill in the blank bf7117f8305e074_3 fill in the blank bf7117f8305e074_5 fill in the blank bf7117f8305e074_6 Aug. 14 fill in the blank bf7117f8305e074_8 fill in the blank bf7117f8305e074_9 fill in the blank bf7117f8305e074_11 fill in the blank bf7117f8305e074_12 fill in the blank bf7117f8305e074_14 fill in the blank bf7117f8305e074_15 Oct.16-reinstate fill in the blank bf7117f8305e074_17 fill in the blank bf7117f8305e074_18 fill in the blank bf7117f8305e074_20 fill in the blank bf7117f8305e074_21 Oct.16-collection fill in the blank bf7117f8305e074_23 fill in the blank bf7117f8305e074_24 fill in the blank bf7117f8305e074_26 fill in the blank bf7117f8305e074_27 Dec. 31-write-off fill in the blank bf7117f8305e074_29 fill in the blank bf7117f8305e074_30 fill in the blank bf7117f8305e074_32 fill in the blank bf7117f8305e074_33 fill in the blank bf7117f8305e074_35 fill in the blank bf7117f8305e074_36 fill in the blank bf7117f8305e074_38 fill in the blank bf7117f8305e074_39 fill in the blank bf7117f8305e074_41 fill in the blank bf7117f8305e074_42 fill in the blank bf7117f8305e074_44 fill in the blank bf7117f8305e074_45 Dec. 31-adjusting fill in the blank bf7117f8305e074_47 fill in the blank bf7117f8305e074_48 fill in the blank bf7117f8305e074_50 fill in the blank bf7117f8305e074_51 b. Journalize the transactions under the allowance method, assuming that the allowance account had a beginning credit balance of $25,620 on January 1 and the company uses the analysis of receivables method. June 8. fill in the blank 8cf655f8bfbffe7_2 fill in the blank 8cf655f8bfbffe7_3 fill in the blank 8cf655f8bfbffe7_5 fill in the blank 8cf655f8bfbffe7_6 Aug. 14 fill in the blank 8cf655f8bfbffe7_8 fill in the blank 8cf655f8bfbffe7_9 fill in the blank 8cf655f8bfbffe7_11 fill in the blank 8cf655f8bfbffe7_12 fill in the blank 8cf655f8bfbffe7_14 fill in the blank 8cf655f8bfbffe7_15 Oct.16-reinstate fill in the blank 8cf655f8bfbffe7_17 fill in the blank 8cf655f8bfbffe7_18 fill in the blank 8cf655f8bfbffe7_20 fill in the blank 8cf655f8bfbffe7_21 Oct.16-collection fill in the blank 8cf655f8bfbffe7_23 fill in the blank 8cf655f8bfbffe7_24 fill in the blank 8cf655f8bfbffe7_26 fill in the blank 8cf655f8bfbffe7_27 Dec. 31-write-off fill in the blank 8cf655f8bfbffe7_29 fill in the blank 8cf655f8bfbffe7_30 fill in the blank 8cf655f8bfbffe7_32 fill in the blank 8cf655f8bfbffe7_33 fill in the blank 8cf655f8bfbffe7_35 fill in the blank 8cf655f8bfbffe7_36 fill in the blank 8cf655f8bfbffe7_38 fill in the blank 8cf655f8bfbffe7_39 fill in the blank 8cf655f8bfbffe7_41 fill in the blank 8cf655f8bfbffe7_42 fill in the blank 8cf655f8bfbffe7_44 fill in the blank 8cf655f8bfbffe7_45 Dec. 31-adjusting fill in the blank 8cf655f8bfbffe7_47 fill in the blank 8cf655f8bfbffe7_48 fill in the blank 8cf655f8bfbffe7_50 fill in the blank 8cf655f8bfbffe7_51 c. How much higher (lower) would Rustic Tables’ net income have been under the direct write-off method than under the allowance method?
a. Journalize the transactions under the direct write-off method. June 8. fill in the blank bf7117f8305e074_2 fill in the blank bf7117f8305e074_3 fill in the blank bf7117f8305e074_5 fill in the blank bf7117f8305e074_6 Aug. 14 fill in the blank bf7117f8305e074_8 fill in the blank bf7117f8305e074_9 fill in the blank bf7117f8305e074_11 fill in the blank bf7117f8305e074_12 fill in the blank bf7117f8305e074_14 fill in the blank bf7117f8305e074_15 Oct.16-reinstate fill in the blank bf7117f8305e074_17 fill in the blank bf7117f8305e074_18 fill in the blank bf7117f8305e074_20 fill in the blank bf7117f8305e074_21 Oct.16-collection fill in the blank bf7117f8305e074_23 fill in the blank bf7117f8305e074_24 fill in the blank bf7117f8305e074_26 fill in the blank bf7117f8305e074_27 Dec. 31-write-off fill in the blank bf7117f8305e074_29 fill in the blank bf7117f8305e074_30 fill in the blank bf7117f8305e074_32 fill in the blank bf7117f8305e074_33 fill in the blank bf7117f8305e074_35 fill in the blank bf7117f8305e074_36 fill in the blank bf7117f8305e074_38 fill in the blank bf7117f8305e074_39 fill in the blank bf7117f8305e074_41 fill in the blank bf7117f8305e074_42 fill in the blank bf7117f8305e074_44 fill in the blank bf7117f8305e074_45 Dec. 31-adjusting fill in the blank bf7117f8305e074_47 fill in the blank bf7117f8305e074_48 fill in the blank bf7117f8305e074_50 fill in the blank bf7117f8305e074_51 b. Journalize the transactions under the allowance method, assuming that the allowance account had a beginning credit balance of $25,620 on January 1 and the company uses the analysis of receivables method. June 8. fill in the blank 8cf655f8bfbffe7_2 fill in the blank 8cf655f8bfbffe7_3 fill in the blank 8cf655f8bfbffe7_5 fill in the blank 8cf655f8bfbffe7_6 Aug. 14 fill in the blank 8cf655f8bfbffe7_8 fill in the blank 8cf655f8bfbffe7_9 fill in the blank 8cf655f8bfbffe7_11 fill in the blank 8cf655f8bfbffe7_12 fill in the blank 8cf655f8bfbffe7_14 fill in the blank 8cf655f8bfbffe7_15 Oct.16-reinstate fill in the blank 8cf655f8bfbffe7_17 fill in the blank 8cf655f8bfbffe7_18 fill in the blank 8cf655f8bfbffe7_20 fill in the blank 8cf655f8bfbffe7_21 Oct.16-collection fill in the blank 8cf655f8bfbffe7_23 fill in the blank 8cf655f8bfbffe7_24 fill in the blank 8cf655f8bfbffe7_26 fill in the blank 8cf655f8bfbffe7_27 Dec. 31-write-off fill in the blank 8cf655f8bfbffe7_29 fill in the blank 8cf655f8bfbffe7_30 fill in the blank 8cf655f8bfbffe7_32 fill in the blank 8cf655f8bfbffe7_33 fill in the blank 8cf655f8bfbffe7_35 fill in the blank 8cf655f8bfbffe7_36 fill in the blank 8cf655f8bfbffe7_38 fill in the blank 8cf655f8bfbffe7_39 fill in the blank 8cf655f8bfbffe7_41 fill in the blank 8cf655f8bfbffe7_42 fill in the blank 8cf655f8bfbffe7_44 fill in the blank 8cf655f8bfbffe7_45 Dec. 31-adjusting fill in the blank 8cf655f8bfbffe7_47 fill in the blank 8cf655f8bfbffe7_48 fill in the blank 8cf655f8bfbffe7_50 fill in the blank 8cf655f8bfbffe7_51 c. How much higher (lower) would Rustic Tables’ net income have been under the direct write-off method than under the allowance method?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Entries for
The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31:
| June 8. | Wrote off account of Kathy Quantel, $8,540. |
| Aug. 14. | Received $6,060 as partial payment on the $15,290 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible. |
| Oct. 16. | Received the $8,540 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cash receipt. |
| Dec. 31 | Wrote off the following accounts as uncollectible (record as one journal entry): |
| Wade Dolan | $2,480 |
| Greg Gagne | 1,540 |
| Amber Kisko | 5,890 |
| Shannon Poole | 3,420 |
| Niki Spence | 940 |
Dec. 31 If necessary, record the year-end
Rustic Tables Company prepared the following aging schedule for its
| Aging Class (Number of Days Past Due) |
Receivables Balance on December 31 |
Estimated Percent of Uncollectible Accounts |
||||||||||||
| 0-30 days | $410,000 | 2% | ||||||||||||
| 31-60 days | 154,000 | 7 | ||||||||||||
| 61-90 days | 49,000 | 20 | ||||||||||||
| 91-120 days | 18,000 | 45 | ||||||||||||
| More than 120 days | 25,000 | 80 | ||||||||||||
| Total receivables | $656,000 |
If an amount box does not require an entry, leave it blank. If an account is not required, select "No Entry" from the dropdown box(es).
a. Journalize the transactions under the direct write-off method.
| June 8. | fill in the blank bf7117f8305e074_2 | fill in the blank bf7117f8305e074_3 | |
| fill in the blank bf7117f8305e074_5 | fill in the blank bf7117f8305e074_6 | ||
| Aug. 14 | fill in the blank bf7117f8305e074_8 | fill in the blank bf7117f8305e074_9 | |
| fill in the blank bf7117f8305e074_11 | fill in the blank bf7117f8305e074_12 | ||
| fill in the blank bf7117f8305e074_14 | fill in the blank bf7117f8305e074_15 | ||
| Oct.16-reinstate | fill in the blank bf7117f8305e074_17 | fill in the blank bf7117f8305e074_18 | |
| fill in the blank bf7117f8305e074_20 | fill in the blank bf7117f8305e074_21 | ||
| Oct.16-collection | fill in the blank bf7117f8305e074_23 | fill in the blank bf7117f8305e074_24 | |
| fill in the blank bf7117f8305e074_26 | fill in the blank bf7117f8305e074_27 | ||
| Dec. 31-write-off | fill in the blank bf7117f8305e074_29 | fill in the blank bf7117f8305e074_30 | |
| fill in the blank bf7117f8305e074_32 | fill in the blank bf7117f8305e074_33 | ||
| fill in the blank bf7117f8305e074_35 | fill in the blank bf7117f8305e074_36 | ||
| fill in the blank bf7117f8305e074_38 | fill in the blank bf7117f8305e074_39 | ||
| fill in the blank bf7117f8305e074_41 | fill in the blank bf7117f8305e074_42 | ||
| fill in the blank bf7117f8305e074_44 | fill in the blank bf7117f8305e074_45 | ||
| Dec. 31-adjusting | fill in the blank bf7117f8305e074_47 | fill in the blank bf7117f8305e074_48 | |
| fill in the blank bf7117f8305e074_50 | fill in the blank bf7117f8305e074_51 |
b. Journalize the transactions under the allowance method, assuming that the allowance account had a beginning credit balance of $25,620 on January 1 and the company uses the analysis of receivables method.
| June 8. | fill in the blank 8cf655f8bfbffe7_2 | fill in the blank 8cf655f8bfbffe7_3 | |
| fill in the blank 8cf655f8bfbffe7_5 | fill in the blank 8cf655f8bfbffe7_6 | ||
| Aug. 14 | fill in the blank 8cf655f8bfbffe7_8 | fill in the blank 8cf655f8bfbffe7_9 | |
| fill in the blank 8cf655f8bfbffe7_11 | fill in the blank 8cf655f8bfbffe7_12 | ||
| fill in the blank 8cf655f8bfbffe7_14 | fill in the blank 8cf655f8bfbffe7_15 | ||
| Oct.16-reinstate | fill in the blank 8cf655f8bfbffe7_17 | fill in the blank 8cf655f8bfbffe7_18 | |
| fill in the blank 8cf655f8bfbffe7_20 | fill in the blank 8cf655f8bfbffe7_21 | ||
| Oct.16-collection | fill in the blank 8cf655f8bfbffe7_23 | fill in the blank 8cf655f8bfbffe7_24 | |
| fill in the blank 8cf655f8bfbffe7_26 | fill in the blank 8cf655f8bfbffe7_27 | ||
| Dec. 31-write-off | fill in the blank 8cf655f8bfbffe7_29 | fill in the blank 8cf655f8bfbffe7_30 | |
| fill in the blank 8cf655f8bfbffe7_32 | fill in the blank 8cf655f8bfbffe7_33 | ||
| fill in the blank 8cf655f8bfbffe7_35 | fill in the blank 8cf655f8bfbffe7_36 | ||
| fill in the blank 8cf655f8bfbffe7_38 | fill in the blank 8cf655f8bfbffe7_39 | ||
| fill in the blank 8cf655f8bfbffe7_41 | fill in the blank 8cf655f8bfbffe7_42 | ||
| fill in the blank 8cf655f8bfbffe7_44 | fill in the blank 8cf655f8bfbffe7_45 | ||
| Dec. 31-adjusting | fill in the blank 8cf655f8bfbffe7_47 | fill in the blank 8cf655f8bfbffe7_48 | |
| fill in the blank 8cf655f8bfbffe7_50 | fill in the blank 8cf655f8bfbffe7_51 |
c. How much higher (lower) would Rustic Tables’ net income have been under the direct write-off method than under the allowance method?
by fill in the blank e0e14b00601df9a_2
Expert Solution
Step 1
Bad Debt Expense - This Expense Arise from the Fact that when the debtors is unable to pay his outstanding and company feel to book it as expense . There are different method to calculate the Bad Debt Expense.
Direct write off Method - In this method, the uncollectible Accounts Receivable are directly written off as the Bad Debt Expense and the expense is shown in the Income Statement.
Allowance method - In this method, the company doesnt wait for accounts to become uncollectible , its based on certain trend will decide the percentage uncollectible and will move it to reserve account
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